Fix roads, then set up tech parks

Fix roads, then set up tech parks
CM Needs To Take Bold Steps And Enable IT/ITES Sectors To Be Engines Of Growth
Vinay Deshpande


The chief minister recently expressed his desire to raise Karnataka from its current seventh position to the top of all states in India. Mr CM, you can accelerate the growth by abandoning conventional thinking when it comes to the budget and its provisions, thinking out of the box, and adopting a completely fresh approach.
If Bangalore and Karnataka have to be a model city and state respectively, infrastructure must take pride of place in all planning by the government.
The first focus should be on the statewide transport infrastructure which needs urgent attention. Roads must meet international quality norms, with speedbreakers standardized and allowed only where essential, and the rail network between Karnataka’s major cities made double-track. HAL airport should be allowed to be used for some short-haul and medium-haul flights, and BIA must be urgently expanded to cater to growing needs.
Next, urgent action for availability of high-quality, reliable, uninterrupted power must be taken up on a war footing, and plans must be formulated for statewide additional capacity to be created on an ‘err on the side of surplus’ availability basis, to mature within the next three to ten years. Further, in order to help improve load balancing and gain transmission efficiencies, why not introduce higher tariff for high-volume consumers during peak hours, to motivate them to work during nonpeak hours?
World-class infrastructure will help the manufacturing sector grow rapidly, and encourage new entrants to establish manufacturing facilities. This, in turn, will help large-scale employment of blue-collar workers as well as surplus hands from rural areas. To further facilitate this, concrete steps need to be taken for skills development as a priority throughout the state. These will include: i) Clear policies combined with a well-defined implementation plan for timely upgradation of curricula, with active involvement of industry, to help bridge the gap between industry needs and trained manpower; ii) Privatization and upgradation of the ITIs and iii) Maximization of industry interface for those undergoing vocational training.
In order to regain Karnataka’s erstwhile lead in the electronics hardware industry, which has been lost over the past four years to neighbouring states, but can provide large-scale employment and generate substantial export revenues, the CM needs to take certain bold steps. These include immediate establishment of a hardware technology park, total exemption from entry tax to export units, and withdrawal of special entry tax, particularly when the Karnataka High Court has held the levy to be unconstitutional. A very unique step will be constitution of a hardware and innovation task force and creation of a Karnataka Innovation Fund to encourage innovation that will stimulate further growth of manufacturing in Karnataka.
The IT/ITES industry, which has boosted Karnataka’s stature to stellar heights and made it the largest exporter in this field, must continue to be supported by elimination of irritants such as differential power tariffs for IT & ITES segments, elimination of VAT on development of software as well as on purchases by EOUs or units in STPI, EHTP, or SEZ, and by simplification and rationalization of labour laws. Finally, the new Karnataka industrial policy should align itself with the EXIM policy of the central government, particularly with respect to benefits extended to EOUs.
When we speak of industry, we cannot ignore the individual. Continuing the Self-Assessment Scheme for property tax, and simplification of forms and procedures for returns and assessments will be great steps forward. Likewise, in keeping with Karnataka’s image of the IT capital, i) BBMP must computerize property data and make online payment of taxes possible; ii) The commercial taxes department must regularly update its website to increase awareness among assessees, and make online filing of returns and taxes mandatory for all assessees paying taxes in excess of Rs 50 lakh per annum.
The sooner are more of these steps taken, the faster we will move to a ‘Suvarna Karnataka’.
(The writer is an entrepreneur and former chairman of CII-Karnataka)